Alex Perlman and Molly Dobson represent the Ann Arbor Area Community Foundation's 45-year span. Dobson was a trustee from 1969-1971. Perlman, a Huron High senior, has been a youth council representative on the AAACF board.

“This has been a challenging year – you’ll hear that word a lot,” Debbie Beuche told about 300 people who attended Tuesday evening’s annual meeting of the Ann Arbor Area Community Foundation. Beuche, the nonprofit’s board chair, said AAACF gave out $2.2 million in grants and scholarships in 2008 – a year in which their annualized investment return was -31%.

The meeting highlighted AAACF’s accomplishments during 2008, and recognized volunteers who were stepping down from their work with the organization. The event also included a presentation on a project funded by the foundation called The B-Side: The Business Side of Youth, a program to encourage entrepreneurship for youth.

But first, the finances.

Financial Report

Like virtually every organization or individual with investments in the market, AAACF took a beating in 2008. At the end of the year, the nonprofit’s assets totaled $39.7 million – down from $53.2 million at the end of 2007. Despite those results, “they could have been much worse,” David Sarns, the board’s treasurer, announced to the gathering on Tuesday. Their investment strategy aims for broad diversification, he said. According to the AAACF annual report, the group’s target asset allocation is domestic equity (25%), international equity (25%), hedge funds (20%), fixed income (10%), private equity/venture capital (10%) and real assets (10%).

For the first quarter of 2009, returns are down 4.9%, Sarns reported. “We hope for better results in the coming quarters.” He also noted that at the beginning of 2009 AAACF cut its administrative budget – by 12%, according to the annual report – to bring costs more in line with the drop in assets.

The B-Side: The Business Side of Youth

Started in 2007, the B-Side is a program of Eastern Michigan University’s Office of Academic Service-Learning. Jessica “Decky” Alexander, the office’s director, said that B-Side has worked with more than 200 youth, ages 13 to 20, many of whom have started their own businesses: tutoring, designing T-shirts, publishing an e-zine and more. The program “fosters a culture of possibility and tangibility,” she said, “and thus entrepreneurship.”

Malik Redding, an entrepreneur and sophomore at Huron High, spoke at the Ann Arbor Area Community Foundation annual meeting on Tuesday.

Malik Redding, a sophomore at Huron High, has been involved in the B-Side for about a year and told the audience on Tuesday that his training has given him the ability to better understand financial statements and speak at public forums like this. His original idea was to open a coffee shop, but instead he decided to start a catering business, called Relax Cafe. He plans to open a food cart in downtown Ann Arbor as well. His longer term goals include going to the University of Michigan Ross School of Business, and expanding his food cart and catering business.

Margaret Rolax, a junior from Pioneer High, started a tutoring business in 2008 through the B-Side, and in March 2009 got a $400 microloan to develop marketing materials. Her business is targeting athletes who need help with their studies, and this coming school year she hopes to expand. She credited the B-Side with helping her develop a business plan.

Accomplishments, Farewells

In addition to the $2.2 million in grants and scholarships awarded in 2008, the AAACF spent the year evaluating how to award a $1 million gift from the Pfizer Foundation, Beuche said at the annual meeting. “We knew that there wasn’t more coming,” she said. “We had to be good stewards.”

Those funds, given by Pfizer early last year as the drug company pulled up stakes from Ann Arbor, were awarded to nonprofits in three areas: Ypsilanti renewal ($101,300 to the Ypsilanti Freighthouse and $300,000 to the Early College Alliance), early childhood development ($196,700 to the Washtenaw Success by 6 program), and arts & culture ($200,000 to the Arts Alliance to help develop a countywide cultural plan). In addition, the AAACF board set aside $200,000 to award in a competitive “Big Ideas” grant process, looking for projects with innovative approaches to community problems. Three project received funding from that earlier this year: 1) Food Gatherers received $92,000 to partner with other agencies to bring healthier food to low-income residents, 2) the Ecology Center got $58,000 for a collaboration to improve energy efficiency in local homes and businesses and to seek renewable energy sources, and 3) Ann Arbor SPARK received $50,000 for economic development through SPARK East in Ypsilanti.

Cheryl Elliott, AAACF president, thanked the more than 325 volunteers involved with the board, the foundation’s affiliate funds, its 32 scholarship programs and its many committees. About 30 of those volunteers were retiring from their work with AAACF, and they were recognized at Tuesday’s event.

The evening also gave a nod to the past and future through a presentation by Molly Dobson, who served as trustee from 1969-1971, and Alex  Perlman, a senior at Huron High who’s a youth council representative on the foundation’s board. The two stood together and contrasted the foundation in its early years compared to now. “Color me Generation Methuselah,” quipped Dobson, as she talked about her tenure in the 1960s. In its first year, the foundation made $6,291 in grants and had assets of $59,000. Perlman noted that they’ve come a long way, now giving out more than $2 million in grants. “You’re showing off,” Dobson chided. No, Perlman replied. “We’re just building on the foundation you laid.”

Cheryl Elliott, president and CEO of the Ann Arbor Area Community Foundation.

The Ann Arbor Area Community Foundation held its annual meeting at the Four Points Sheraton.

The IAS sign is among the detritus set outside following the firm's eviction this week.

The NEW Center, a group that provides support services to local nonprofits, received calls from several people on Tuesday who were searching for alternatives to get their websites up again, said Linh Song, a NEW Center technology manager. Song is director of NEW’s npServ program, which helps nonprofits manage their information technology services.

The timing of this outage – which in some cases affected email service as well – was especially difficult for nonprofits, given that it has occurred during the height of the giving season, when groups typically see their largest year-end donations and await word on grant applications. You want to be as responsive as possible – you don’t want to worry about whether your email works, Song said.

IAS has a strong presence in the local nonprofit community. In addition to AATA and the Ann Arbor Area Community Foundation, it provided web hosting services for the Ann Arbor Convention & Visitors Bureau and the Ann Arbor Arts Alliance, among others.

NEW Center was directing institutions to Online Technologies Corp., another Ann Arbor firm that provides Internet services. On Tuesday afternoon, The Chronicle left messages with OTC executives Yan Ness and Mike Klein – two longtime local tech entrepreneurs – but has not yet heard back from them. UPDATE: Just after 4 p.m. we received a call from Klein, who said that OTC is offering a free month of website and email service to anyone affected by the IAS situation. They also are offering free co-location of servers, if necessary. OTC, with offices at Avis Farms, has received dozens of calls from people seeking help, Klein said: “They can’t afford downtime.” To contact OTC, call 734-213-2020 and press 2 for sales.

It’s unclear what has happened to IAS, owned by Arthur Talbot and Kelley Bezrutch. Outside the firm’s former office at 1327 Jones Drive on Tuesday, landlord Doug Smith told The Chronicle he evicted IAS for “chronic non-payment of rent,” but declined to give further details. The streetside curb outside the building was piled with office furniture, computer equipment, signs, and books.

This Coke bear was among the IAS artifacts scooped up by people who happened by. The Chronicle could not verify that the bear had been reprogrammed with the tune, "I'd like to teach the world to ping."

The Chronicle was unable to reach Talbot or Bezrutch. The firm’s phone rang unanswered. The IAS website was also down.

When the giant eye on your screen turns red

When called by The Chronicle to find out how the Ann Arbor Area Community Foundation was dealing with the situation, AAACF staff pointed us to their network consultant, LTI Information Technology, which is not affiliated with IAS, to give us some insight into what happens when the company hosting your web services gets its plug pulled. What does your tech support service do?

Kevin Phillips of LTI spoke with us by phone and explained that LTI has provided network consulting for AAACF long before now.

In fact, LTI knew about the problems with AAACF’s web services before AAACF did. How? LTI runs an appliance on AAACF’s network that monitors status on all manner of conditions at any given time. How does that appliance give an alert when something goes wrong?

What happened at 1:30 p.m. yesterday was this: A giant eye on a computer screen at LTI turned red and displayed a message that no MX records were being served. That, said Phillips, could mean several different things. And as it turned out, what it meant was that IAS’s servers – with both the DNS (domain name server) and the content for the web service – were no longer providing that service.

Phillips said that they’d advised AAACF to begin migrating some of their network operations off IAS servers a few months ago, something AAACF had actually done. “It’s great when clients follow your advice, and it pays off almost instantly,” Phillips said. One of those operations was electronic mail. For two months now, AAACF has hosted its email content on its own Exchange servers. By 4 p.m. today, LTI expects to have completed the switch to a new DNS provider (the part that converts all the numbers used in Internet addresses to the names we typically see, like www.thisheresadomainname.com). It could take as long as a couple of days, Phillips said, for the new information to propagate across the whole Internet.

According to Phillips, the content of the AAACF website will have to be retrieved from backup files, which were not stored on IAS servers. The first step, though, is to get the DNS back up and running.

Linh Song said staff at the NEW Center were trying to figure out if they could provide temporary email service for some of the affected nonprofits. She said this situation is a good example of how much we rely on technology and how important it is to have contingency plans.

[Note: Dave Askins provided some of the reporting for this story.]